Solar Power Purchase Agreements (PPAs)
A power purchase agreement is a type of solar financing where someone else owns and maintains the solar system on your property, and you simply pay for the solar energy it produces, much like you pay your existing utility for power now. PPAs were once available only to large commercial entities, but have proven popular among homeowners due to their structure: no-to-low money down, then a low, pre-determined rate for the solar energy being generated on your property.
Sometimes a PPA’s rate is flat and sometimes it’s calculated to rise slightly over the years, but unlike utility rates, your PPA rate is pre-negotiated for the lifetime of the agreement (usually 15 to 20 years). So, instead of paying for dirty coal-fired grid power with rates that can go up at any time and by any amount, you’re paying for the clean, renewable energy generated through your solar panels and you know exactly how much you’ll be paying for that energy for as long as you have it.
When does it make economic sense to get a Power Purchase Agreement?
Since it’s a monthly charge for solar electricity, the economics are simple to evaluate: if the monthly PPA payment is cheaper than your electric bill, a PPA makes economic sense for you.
Sometimes, a PPA provider will offer you the option to pre-purchase all the solar energy you’re likely to use upfront in exchange for an ultra-low rate on that power. This is called the “pre-paid” option and is also proving very popular among homeowners, since it’s such a great deal — it lets you buy all the electricity you’ll ever need at an ultra-low, pre-negotiated rate. This would be like buying all the gasoline you’d ever need for your car at today’s prices.
What else is included with a Power Purchase Agreement?
Your PPA provider monitors, maintains, and repairs the system as a part of your deal with them. Monitoring the system means they’ll know about any panels that are under performing right away, so they can be pro-active about repairs.
Where can I get a quote for a Power Purchase Agreement?
One Block Off the Grid offers a variety of PPA and solar leasing options and can help you pick out the one that’s best for your home. Sign up (free) to get a quote for your home.
When getting a quote on a solar lease or a power purchase agreement, what do I need to know?
When you’re gathering quotes on solar leases, be sure to cover the following:
- What will my monthly payments be?
- Will those payments go up over time and if so, by how much?
- What’s the total cost of the lease over its entire lifetime?
- How does that compare to purchasing the same size system?
- What’s my short term and long term ROI on the lease/PPA?
- If I want to buy the solar system at some point, what are my options?
- If I decide to buy the system at fair market value, how is that value determined?
- How does this leasing/PPA provider handle the solar rebates and incentives associated with installing the system?
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